military tax rule 2/5

[Kelli Powell]

My son bought a house in September 2022, lived in it, and then was deployed in March 2023. He will be returning soon but will be PCS to another state in the summer.

Questions:

He has been renting the house while he was deployed and only lived in the house for about 9 months after purchasing it. It will continue to be rented out because of his location change. Will the extension of the 2 out of 10-year rule apply to him if he decides to move back to Colorado and live in the house in the future? My understanding is that military can receive an extension of the "must live in the home 2 out of 5 years" to 10 years.

How does this work for taxes?? Does he have to report the income he received this past year and declare it a rental event though he would like to move back in eventually?

Will he still have to pay capital gains if he sells?

What are the options here?

Thanks!